Vapor Volume Resulting In Major Swings Indicates Evaporating Market Liquidity

We keep harping on the lack of volume to the upside, and inversely the massive flushes on every down draft. This is due to basically no real money buying, but very real money selling on any appropriate catalysts. So who does the buying? And how does vapor volume manage to push the market by nearly 1%, usually higher? Simple - there is no liquidity left at the margin for the entire market! Market neutrals lost the war... And the results will be forthcoming soon. Some terrific insight from Art Cashin.

S&P Again Stalls At Resistance - For the second day in a row, the bulls tried to punch through the S&P resistance at 1102/1106.  Monday, the attempt flamed out at 1102.96.  Yesterday, they made it all the way to 1103.69.  That failure was followed by a rather rapid evaporation of the rally with all three indices closing down on the day.

The indecisiveness in the stock market has led to relative illiquidity.  With more players on the sidelines, market moves can be disproportionate to the volume involved.

Tuesday morning, about 10:00 a.m., the Dow had a sudden sharp 70 point swing.  It was over in a minute or two.  Floor traders were astounded to notice that the 70 point reversal saw volume jump only 15 million shares.  That move, on such small volume, was stunning and indicates that liquidity is well below the norm.

While there was some news and data yesterday, the markets seemed self-absorbed and somewhat hypochondriacal.  It kept checking its own pulse and temperature to see if it felt well enough to rally through the resistance.

Around 1:00, they made their first real try but stopped on a dime.  They pulled back, rested and tried to regroup.  Around 2:00, they failed again at virtually the same spot.  Having failed twice, they just gave up.

Another problem for the bulls was that the volume ticked up slightly as prices fell.  Low volume rallies that devolve into higher volume selloffs are not a good sign.  That made the close seem a bit gloomier.

Comments

[Anonymous]

Gotta love that mystery bid that just won't let the market go down. Manipulation at work.

[curbyourrisk]

Can theer be a mystery bid if they are all testifying in court????

[Chopshop]

it's not a mystery 'bid' as per volume / flash but rather a mystery TICK popper who's well-executed basket orders are simply gunning the 'right' individual issues at the 'right' time(s).

hypothetically speaking (of course):

start with IBM (dow divisor);

then XOM (out-sized mkt cap weighting across various indices / ETFs; pulls CVX, OIH etc. in an instant, which are all basket linked to the hilt);

then move onto AAPL bc while not part of the NYSE (cumulative) TICK, the cult of cupertino accounts for c. 18% of the Q's, since the NASDAQ Allocation Committee gamed the system when weighting crapple n mr. softee some 3+ years ago.

that's the 'game' n how it be done on the most basic level ... uh-legedly.

just watch the TICK, it always leads.

[phaesed]

thanks for postin Cashin's comments.... I've been considering opening an account with them solely for his comments, gotta love the ruddy Irishman's wit and intellect :P One of my favourite moments was the morning we opened down 400pts and he said "te morituri salutant"

[Anonymous]

That's the (severe) downside to government manipulation of markets. Traders have lost confidence in the prices they see on their screens, so they step aside. Home players aren't quite there yet, but at some point they'll start to sell their stock back to Wall Street. When that happens Bernanke will have to add the US equity market to his portfolio.

[bugs_]

"This market is tougher than a $2 steak"

[Seal]

Don’t believe everything you think. It seems incredible to me seeming active and intelligent market ‘participants’ somehow think or at least aver the markets are not manipulated. The best introduction, other than closely watching the tape, is : The Invisible Hand (of the U.S. Government) in Financial Markets by Robert Bell April 3, 2005 Summary: The U.S. government is manipulating all major U.S. financial markets—stocks, treasuries, currencies. This article shows how it is possible and how it is done, why it is done, who specifically is doing it, when they do it, and where they get the money to do it. http://www.financialsense.com/editorials/reality/2005/0403.html I further assert that, at least during the Bush years, individuals and entities with discernable accounts were targeted and traded against – probably through a mechanism in DoD.

[rootless cosmop...]

Yeah, how can anyone who is intelligent not believe the up and downs of the markets are mainly the result of some secret manipulation by a government cabal, even though there isn't any hard evidence.

I also have an interesting read:

"Goertzel says the new study provides an intriguing but partial look at the inner workings of conspiracy thinking. Such convictions critically depend on what he calls “selective skepticism.” Conspiracy believers are highly doubtful about information from the government or other sources they consider suspect. But, without criticism, believers accept any source that supports their preconceived views, he says.

[...]

The study, still unpublished, shows that conspiracy believers displayed a greater propensity than nonbelievers to jump to conclusions based on limited evidence."

(Source: "The inner worlds of conspiracy believers", Science News. Magazine of the Society for Science & the Public, June 20, 2009, Vol. 175, #13, pg. 11, http://www.sciencenews.org/view/generic/id/44046/title/The_inner_worlds_...)

rc

[Anonymous]

Has Cashin been cashin out ?? Didnt he cash out a while ago ??

[Anonymous]

Tyler, it just sounded like Liesman took a shot at Zerohedge at 2:05 pm EST, live on CNBC.

[ATG]

.

[ATG]

This market is poised to decline

after an AAPL SOTU headfake.

There is no volume because there

is no integrity.

Darrell Issa, the personally wealthiest

member of The House, just closed the

Government Oversight and Reform Committee

hearings for Chair Edelphus Towns on the Fed

Treasury Wall Street Cabal by declaring it

bipartisan. We will know when the indictments

come on the biggest theft in history and the

markets breathe a sigh of relief after some time...

http://www.jubileeprosperity.com/